Congratulations, if you decided to invest in dollars at the end of last year; In the main securities of the Chilean Stock Exchange; at Acciona Energy, Repsol or CaixaBank; and of course companies in the defense sector. You do not need to complain as you will receive returns ranging from 10% to 30%. On the other hand, if he had invested in American tech companies, the German stock market, or the world’s leading swimming pool manufacturer (Spanish company Fluidra), he would have lost from 10% to 55%, which the markets penalized. The company from Sabadell is the hardest hit of the Ibex 35. And even worse, if he decided to buy bitcoin at the beginning of the year. The cryptocurrency is trading 57% down from the end of 2021. Gold, an excellent shelter value in times of turbulence, lost 5.5%.
U.S. stock indexes are on track to close 2022 with the worst-known record since 1929, which will be remembered for the October crash that heralded the Great Depression. No one is talking about a depression, but they are talking about a recession that is already fueling the main reviews of analytics firms. September begins to confirm the sensations that developed months ago. Not because of the desire to suffer, but rather by observing a complex panorama in the midst of a war that no one can predict how or when it will end. In mid-August, when the bags were believed to have touched the bottom to take a break, the tables were turned. The fault was in the executives of the central banks who met in Jackson Hole (Wyoming, United States) at the foot of Grand Teton National Park. There, the head of the American Federal Reserve (Fed), Jerome Powell announced that the rate hike will continue and gain momentum. Message: Inflation must be brought under control before it gets out of control. This is called performing accelerated surgery as you do. Paul VolckerFed Chairman to control the price increase of the late 1970s and early 1980s. This caused a recession in the first year of his presidency. ronald reagan. Then came tax cuts, party years, and unstoppable growth until the stock market crash of October 1987, heralding another economic downturn.
Scholars disagree on when it is necessary to define an economy that is in recession. The largest consensus agrees that two conditions must be met: two consecutive quarters with a decline in GDP and a significant devastation in employment. This last factor did not occur in the US in the last two quarters when the economy turned red. In Europe, the estimates are rougher. Germany’s dependence on Russian gas, the locomotive of the European Union, will determine the autumn and winter agenda. If Putin turns off the tap, the consequences will be thunder across the continent. Are government measures sufficient to reduce the energy expenditure of companies and citizens? The energy costs began to become unaffordable by the important industrial sectors, which saw the rapid increase in energy costs and put the financial statements of the companies into trouble. In the midst of this situation, the Spanish Government’s proposal to raise the minimum wage could have unexpected consequences for many companies that would choose to delay their recruitment. Another question mark politically: Italy. The third economic power of the Union is holding general elections on 25 September. After the end of the Mario Draghi era, polls predict a victory of the right that would allow Giorgia Meloni, who started her career as an apprentice, to appoint skeptical Prime Minister of Europe through a coalition, despite having moderated her speech. Silvio Berlusconi’s photo.
The excellent tourist season, which has kept Spain’s economy one of the continent’s strongest, has come to an end. Now credit card bills will come, and for many, the first installments of debt contracted to pay off summer vacations will be paid, including the purchase of sky-high watermelons. The renewal of mortgages will bring unpleasant surprises in installments due to Euribor on the way to reach 2% at the end of the year. If reaching the end of the month is already difficult for many families, the financial situation will worsen. Consumption will be adjusted. The solution to fix this isn’t to ask for a salary or pension increase that’s exactly equivalent to an increase in prices. This will only keep the inflationary ball growing, as money history shows. It’s time to bet on financial discipline and wait for the storm to pass. Victory cannot be claimed until inflation returns to more reasonable figures. There is something much worse than a recession, and that is stagflation: the economy in the red, job losses and skyrocketing prices.
We do not know the evolution of war and energy prices. In turn, all that’s left is to resort to experience to think that if you do your homework, everything will be fine except for a disaster in the end.